Barkers Baked Goods purchases dog treats from a supplier on February 2 at a quantity of 21,000 treats at $1 per treat. Terms of the purchase are 2/10, n/30. Barkers pays half the amount due in cash on February 28 but cannot pay the remaining balance due in four days. The supplier renegotiates the terms on March 4 and allows Barkers to convert its purchase payment into a short-term note, with an annual interest rate of 6 percent, payable in 9 months. Show the entries for the initial purchase, the partial payment, and the conversion. If an amount box does not require an entry, leave it blank. Feb 2. _________ _________ _________ _________ _________ _________ Feb. 28 _________ _________ _________ _________ _________ _________ Mar. 4 _________ _________ _________ _________ _________ _________
Barkers Baked Goods purchases dog treats from a supplier on February 2 at a quantity of 21,000 treats at $1 per treat. Terms of the purchase are 2/10, n/30. Barkers pays half the amount due in cash on February 28 but cannot pay the remaining balance due in four days. The supplier renegotiates the terms on March 4 and allows Barkers to convert its purchase payment into a short-term note, with an annual interest rate of 6 percent, payable in 9 months.
Show the entries for the initial purchase, the partial payment, and the conversion. If an amount box does not require an entry, leave it blank.
Feb 2. _________ _________ _________
_________ _________ _________
Feb. 28 _________ _________ _________
_________ _________ _________
Mar. 4 _________ _________ _________
_________ _________ _________
Notes are instrument issued by company acknowledging the debt raised by company . It is a liability to be paid after certain period of time with interest.
Journal is a book where all the entries has been recorded in chronological order.
Term 2/10 , net 30 means that , if the customer made payment with in 10 days , then we will allow him 2% discount and if he made payment after 10 days then no discount will be given.
Total credit period to customer is 30 days i.e. customer need to make payment with in 30 days.
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